Eyewitness: Sandbanks - Palm Beach, UK (just follow the A338)

A hut on the Dorset coast will cost you £70,000. A modest house £4m. Only three places in the world are more expensive. And just wait until you meet the neighbours...
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The Independent Online

This could be Florida. Waiters in black swerve between potted palm trees, taking cocktails to elegant women who never remove their dark glasses. They watch from the hotel terrace as children with sunbleached hair play on a sandy beach. Then rain comes slashing in from the Channel, and it feels like England again.

The Sandbanks Hotel is in a place some people call the Palm Beach of Britain. This small peninsula on the edge of Poole Harbour is the fourth most expensive place to buy property in the world. A relatively modest house by the water in Sandbanks has just gone on sale for £4m.

Meanwhile, a dozen miles along the coast at Hengistbury Head, estate agents offer a beach hut for the price of a family home. The hut is no bigger than a garden shed. It has no running water, gas, or electricity, and needs a lick of varnish. You cannot reach it by car, only by passenger ferry or a serious walk along the edge of Christchurch harbour. And yet this tiny property is expected to sell for nearly £70,000.

The sales of the beach hut and the house both made headlines last week. Together they reveal an unlikely truth: all Britain has gone house crazy, but the Dorset coast is the maddest place of all.

"Houses in Sandbanks have a harbour view on one side and a beautiful beach on the other," says Tom Doyle. "You've got to go to Palm Beach in Florida to find that anywhere else."

Sandbanks is little more than a road along a thin peninsula, going into a loop at the end. It feels like an island out on the edge of the second largest natural harbour in the world. Property there costs £699 per square foot, which makes it the fourth most expensive place to buy behind Eaton Square in London, Barker Road in Hong Kong and Fifth Avenue in New York. The figures come from the Corcoran International Report, and are often quoted by Mr Doyle in his ceaseless promotion of Sandbanks as the home of the rich and famous.

"I drive a Bentley," says Mr Doyle, who began trading in the area 25 years ago. The tan and the gold Rolex trimmed with diamonds betray a man who enjoys good living. "The car has tinted windows to keep prying eyes out. If I was seen to be shouting about who my rich and famous clients were I would not keep them for long."

They are, however, known to include England footballers Darren Anderton and Jamie Redknapp, whose pop singer wife Louise is the star most often spotted by locals. Eddie Jordan, boss of the Formula One racing team, has a house nearby. So does the cricket legend turned commentator Geoff Boycott. The £4m house in Pearce Avenue belongs to Harry Redknapp, director of football at Portsmouth and Jamie's dad. But most of Mr Doyle's clients are people you have probably never heard of.

"A lot of the time these are third or fourth houses," says Mr Doyle. "You might be a wealthy industrialist from Leicester who has a yacht based at the Salterns Marina. You come here for four or five weeks a year and probably have a holiday apartment. Eventually the wife says, 'If you're going to keep coming here and playing with your boat I want a bigger house.' So you downsize your home in Leicester and buy one here. The really rich don't bother downsizing, they just keep buying."

House prices have risen by an average 11 per cent across the country in the past year, it was announced last week. In Sandbanks they have gone up by more than one-third. Barclays International and the Chase Manhattan bank have large offices in Poole. The train service to London is slow, but the motorways are good and the airport close by.

There are no more than a couple of hundred properties on the peninsula, a strange mixture of bespoke mansions with locked gates, tumbledown boatyards, holiday flats and ordinary suburban houses, many of whose owners have been there for years. One 90-year-old man has been offered £3m for his plot, but told the multi-millionaire buyer "to shove it up his arse", says Mr Doyle. "Sometimes it is a case of waiting for the grandchildren to inherit. We have a team going round asking how people are. In the nicest possible way."

Windsurfers love Poole Harbour because the sea is so shallow that learners can just step back up when they fall off. From a distance they seem to walk on water. In high summer the road into Sandbanks is so jammed that not even a chauffeur-driven Rolls can get through.

Number 95 is not the biggest, tidiest, or nicest beach hut at Hengistbury Head. Through the window I can see a kayak and windsurfing equipment jammed between the sofabed and the gas stove. The breeze dies away to leave only the clink of rigging, and the squawk of seagulls. Colin and Colleen Hopkins are among the few inhabitants to have lingered. They have spent a fortnight in number 97, which they bought six years ago for £18,500. "We might think about selling if it ever got to £100,000," says Colin. "But then you've still got to go somewhere for your holidays, haven't you?"

The Hopkins live in Southbourne, a 15-minute cycle ride away across the harbour, but are on holiday at the hut with Tom, their eight-year-old son, and Nipper the one-eyed dog. The room easily fits three adults and a boy, on a sofa and at a kitchen table. The family sleeps in what look like two cupboards at the end of the room. That's what makes these beach huts almost unique, and drives the price up: you are allowed to sleep in them from March to October. The headland feels like an island, cut off from the world, says Colleen. "It is wonderfully peaceful."

Still, £70,000 seems a lot. Until I remember the rich man that Tom Doyle told about who owns a £3m house in Poole. This millionaire also has a flat on the beach at Sandbanks worth £1m. "They use it when the grandchildren come," said Mr Doyle. "They call it the beach hut."